U.S. copper futures closed up nearly 1 percent on Tuesday, albeit in extremely thin holiday volumes, with a return of London trading expected to offer further insight into market direction, traders said.
The London Metal Exchange (LME) was closed Tuesday for the Boxing Day holiday. Regular trading will resume on Wednesday.
"It was really quiet down here, with locals jobbing it around. We pushed to the upper end of Friday's range but could not muster any follow-through buys. We'll have to wait and see what London does overnight. Will they play catch-up or will last week's bearish trend continue?," one copper broker said.
Copper for March delivery settled up 2.40 cents, or 0.84 percent, at $2.8780 a lb on the New York Mercantile Exchange's COMEX division, after dealing in a tight 4-cent range between $2.8450 and $2.8840.
Spot December rose 2.05 cents on day to finish at $2.8505.
Volume just before the close was estimated at 2,000 lots.
Dealers said the market derived some of its early strength from the gains registered overnight in Asia, where Shanghai copper futures reversed earlier weakness to settle higher on Tuesday.
Expectations that China's economy would continue to grow at break-neck speed offered some support to the copper market, as demand for industrial metals like copper would grow as the economy expands.
China's State Information Centre said the country's economy would probably grow by around 9.5 percent in 2007 as anticipated rises in domestic consumption offset slowing fixed-asset investment and foreign trade.
However, official customs data from China over the weekend showed the world's leading consumer of the red metal imported 4.2 percent less refined copper at 66,345 tonnes in November compared with year-ago data.
Tuesday, December 26, 2006
Thursday, December 21, 2006
Copper fell to an eight-month low in London after the U.S., the world's second-largest user of the metal, said its economy grew slower than projected in the third quarter.
Copper for delivery in three months on the London Metal Exchange declined $130, or 2 percent, to $6,400 a ton as of 2:01 p.m. local time. That's the lowest intraday price since April 21.
Copper for delivery in three months on the London Metal Exchange declined $130, or 2 percent, to $6,400 a ton as of 2:01 p.m. local time. That's the lowest intraday price since April 21.
Wednesday, December 20, 2006
Copper fell to a fresh six-month low on Wednesday after a rise in inventories reinforced expectations that falling prices are likely to dominate the picture next year, analysts said.
Mining shares fell despite wider stock market gains. London-listed Xstrata, Kazakhmys, Rio Tinto and Antofagasta were all down around 0.3 percent.
Copper for delivery in three months traded down at $6,550 a tonne on the London Metal Exchange in official rings, from $6,640 on Tuesday. Prices have fallen by around 25 percent since the record high of $8,800 in May.
Stocks of copper at LME warehouses jumped 4,600 tonnes to 177,225 tonnes, In July 2005 copper stocks were little more than 25,000 tonnes.
The news sent copper prices tumbling to $6,510, the lowest since the middle of June. The previous six-month low of $6,618 was seen last Friday.
"(The fall) is on account of a ... rise in stocks and the announcement by workers at Chile's Altonorte copper smelter yesterday, that they have accepted an offer from Xstrata, said Man Financial in a research note.
Also under pressure was lead, down $5 at $1,630 after stocks rose 725 tonnes to 42,150. Earlier it fell to $1,590, matching the two-week low set last week.
Consultants think the rising stocks trend of recent weeks to continue and expect a lead surplus early next year.
Aluminium was down $46 at $2,764 after the stock data showed a rise of 1,600 to 685,450 tonnes.
CONTRACT DEALS
Analysts said the settlement of some crucial wage demands had taken away an important support for base metals prices.
Workers at two big unions at Chile's Codelco Norte, the largest division of the world's biggest copper miner, accepted a contract offer from the company on Tuesday.
The decision left union No. 1, the biggest and oldest at Codelco Norte, as the only one of the six unions at the division that has not reached an agreement with management. It said it would vote on the same offer on Wednesday.
Elsewhere in Chile, workers at the 300,000 tonne-per-year Altonorte copper smelter accepted an offer from owner Xstrata and ended their day-old strike on Tuesday.
However, opinion is split on whether the urbanisation of China, India and Brazil would boost metals demand to the extent that it offsets lower demand from the United States, where economic growth is slowing.
Many think it will be enough to support prices at current levels, others disagree.
"We are not particularly positive about 2007, you are going to see an increase in supply coming next year at a time when demand growth is likely to tail off a bit," Commerzbank analyst Peter Dixon said.
"Prices will remain fairly steady, but I think you will see the froth of this year taken away. I wouldn't be surprised to see falls of 10, even 20 percent."
Zinc was lower at $4,230/4,231 from Tuesday's $4,340 close, nickel gained $200 to $33,800 and tin traded down at $11,000 from $11,125/11,175.
Mining shares fell despite wider stock market gains. London-listed Xstrata, Kazakhmys, Rio Tinto and Antofagasta were all down around 0.3 percent.
Copper for delivery in three months traded down at $6,550 a tonne on the London Metal Exchange in official rings, from $6,640 on Tuesday. Prices have fallen by around 25 percent since the record high of $8,800 in May.
Stocks of copper at LME warehouses jumped 4,600 tonnes to 177,225 tonnes, In July 2005 copper stocks were little more than 25,000 tonnes.
The news sent copper prices tumbling to $6,510, the lowest since the middle of June. The previous six-month low of $6,618 was seen last Friday.
"(The fall) is on account of a ... rise in stocks and the announcement by workers at Chile's Altonorte copper smelter yesterday, that they have accepted an offer from Xstrata, said Man Financial in a research note.
Also under pressure was lead, down $5 at $1,630 after stocks rose 725 tonnes to 42,150. Earlier it fell to $1,590, matching the two-week low set last week.
Consultants think the rising stocks trend of recent weeks to continue and expect a lead surplus early next year.
Aluminium was down $46 at $2,764 after the stock data showed a rise of 1,600 to 685,450 tonnes.
CONTRACT DEALS
Analysts said the settlement of some crucial wage demands had taken away an important support for base metals prices.
Workers at two big unions at Chile's Codelco Norte, the largest division of the world's biggest copper miner, accepted a contract offer from the company on Tuesday.
The decision left union No. 1, the biggest and oldest at Codelco Norte, as the only one of the six unions at the division that has not reached an agreement with management. It said it would vote on the same offer on Wednesday.
Elsewhere in Chile, workers at the 300,000 tonne-per-year Altonorte copper smelter accepted an offer from owner Xstrata and ended their day-old strike on Tuesday.
However, opinion is split on whether the urbanisation of China, India and Brazil would boost metals demand to the extent that it offsets lower demand from the United States, where economic growth is slowing.
Many think it will be enough to support prices at current levels, others disagree.
"We are not particularly positive about 2007, you are going to see an increase in supply coming next year at a time when demand growth is likely to tail off a bit," Commerzbank analyst Peter Dixon said.
"Prices will remain fairly steady, but I think you will see the froth of this year taken away. I wouldn't be surprised to see falls of 10, even 20 percent."
Zinc was lower at $4,230/4,231 from Tuesday's $4,340 close, nickel gained $200 to $33,800 and tin traded down at $11,000 from $11,125/11,175.
Tuesday, December 19, 2006
Copper futures for March delivery gained 2.35 cents, or 0.8 percent, to $3.0295 a pound on the Comex division of the New York Mercantile Exchange today. Prices have dropped 25 percent from a record $4.04 a pound in May on speculation demand will ease.
On the London Metal Exchange, copper for delivery in three months gained $45, or 0.7 percent, to $6,680 a metric ton at 6:27 p.m. local time.
Copper prices in New York rose after workers walked off the job at a smelter in Chile owned by Xstrata Plc., the world's fourth-largest producer of the metal.
The strike at the Altonorte smelter, Chile's third-largest, occurred after negotiators failed to reach an accord on wages, union president Isidro Cabrera said today. Prices have gained 48 percent this year as labor disputes and mine accidents disrupted production in countries from South America to southeast Asia.
The strike is ``giving a small boost to prices,'' said Marc Kaplan, president of Mews Metals Trading LLC in Verona, New Jersey. ``It would really have to go on for two or three months to make any sort of impact'' on output, he said.
The Altonorte smelter in 2005 produced 297,567 metric tons of almost pure copper from copper concentrates, which is semi- processed copper, according to the Web site of its then owner, Falconbridge Ltd. Zug, Switzerland-based Xstrata purchased Falconbridge this year. The production accounts for almost 2 percent of world supply.
``The importance of this strike shouldn't be overstated,'' said Stephen Briggs, a London-based analyst at Societe Generale. ``The concentrate here can be diverted to other smelters. The bottleneck in copper is at the mine level, not the smelter level.''
Codelco
A strike at Codelco, the world's largest copper producer, would have a bigger impact on prices, Briggs said.
``We have to hear about how the Codelco negotiations are going and that could spur another sharp upside move if there are signs of trouble there,'' said Edward Meir, an analyst at Man Financial Inc. in Stamford, Connecticut, wrote in a report.
``Copper, therefore, looks like it could stabilize at current levels until the various strike and labor issues are resolved,'' he said.
Workers at the Codelco's Chuquicamata mine are seeking wage increases after soaring metal prices increased mining-company profits. The latest offer from Codelco, which is owned by the Chilean government, was ``too low,'' Jeremias Olivares, a union leader, said on Dec. 14. Chuquicamata is Codelco's biggest mine.
Hedge Funds
Hedge-fund managers and other large speculators increased their net-short position in New York copper futures in the week ended Dec. 12, according to U.S. Commodity Futures Trading Commission data.
Speculative short positions, or bets that prices will fall, outnumbered long positions by 17,526 contracts on the Comex division of the New York Mercantile Exchange, the Washington- based commission said in its Commitments of Traders report. Net- short positions rose by 444 contracts, or 3 percent, from a week earlier.
Copper futures fell last week, dropping 3.1 percent to 301.65 cents per pound on Friday. Miners, producers and other commercial users were net-long 20,983 contracts, down 235 contracts, or 1 percent, from the previous week.
Each Friday the CFTC publishes aggregate numbers for long and short positions for speculators such as hedge funds and institutional investors, as well as commercial companies that buy or sell futures to protect against price moves. Analysts and investors follow changes in speculators' positions because such transactions can reflect an expectation of a change in prices.
On the London Metal Exchange, copper for delivery in three months gained $45, or 0.7 percent, to $6,680 a metric ton at 6:27 p.m. local time.
Copper prices in New York rose after workers walked off the job at a smelter in Chile owned by Xstrata Plc., the world's fourth-largest producer of the metal.
The strike at the Altonorte smelter, Chile's third-largest, occurred after negotiators failed to reach an accord on wages, union president Isidro Cabrera said today. Prices have gained 48 percent this year as labor disputes and mine accidents disrupted production in countries from South America to southeast Asia.
The strike is ``giving a small boost to prices,'' said Marc Kaplan, president of Mews Metals Trading LLC in Verona, New Jersey. ``It would really have to go on for two or three months to make any sort of impact'' on output, he said.
The Altonorte smelter in 2005 produced 297,567 metric tons of almost pure copper from copper concentrates, which is semi- processed copper, according to the Web site of its then owner, Falconbridge Ltd. Zug, Switzerland-based Xstrata purchased Falconbridge this year. The production accounts for almost 2 percent of world supply.
``The importance of this strike shouldn't be overstated,'' said Stephen Briggs, a London-based analyst at Societe Generale. ``The concentrate here can be diverted to other smelters. The bottleneck in copper is at the mine level, not the smelter level.''
Codelco
A strike at Codelco, the world's largest copper producer, would have a bigger impact on prices, Briggs said.
``We have to hear about how the Codelco negotiations are going and that could spur another sharp upside move if there are signs of trouble there,'' said Edward Meir, an analyst at Man Financial Inc. in Stamford, Connecticut, wrote in a report.
``Copper, therefore, looks like it could stabilize at current levels until the various strike and labor issues are resolved,'' he said.
Workers at the Codelco's Chuquicamata mine are seeking wage increases after soaring metal prices increased mining-company profits. The latest offer from Codelco, which is owned by the Chilean government, was ``too low,'' Jeremias Olivares, a union leader, said on Dec. 14. Chuquicamata is Codelco's biggest mine.
Hedge Funds
Hedge-fund managers and other large speculators increased their net-short position in New York copper futures in the week ended Dec. 12, according to U.S. Commodity Futures Trading Commission data.
Speculative short positions, or bets that prices will fall, outnumbered long positions by 17,526 contracts on the Comex division of the New York Mercantile Exchange, the Washington- based commission said in its Commitments of Traders report. Net- short positions rose by 444 contracts, or 3 percent, from a week earlier.
Copper futures fell last week, dropping 3.1 percent to 301.65 cents per pound on Friday. Miners, producers and other commercial users were net-long 20,983 contracts, down 235 contracts, or 1 percent, from the previous week.
Each Friday the CFTC publishes aggregate numbers for long and short positions for speculators such as hedge funds and institutional investors, as well as commercial companies that buy or sell futures to protect against price moves. Analysts and investors follow changes in speculators' positions because such transactions can reflect an expectation of a change in prices.
Monday, December 18, 2006
Shanghai copper futures closed steady on Monday, recouping earlier losses as London prices rallied after workers announced a strike at a smelter in Chile.
Chinese copper futures were little changed, with the most active February contract 20 yuan weaker at 63,090 yuan a tonne.
The contract had earlier dipped one percent to 62,500 yuan, a one-month low.
At 0727 GMT, copper for delivery in three months on the LME was up $85, or 1.25 percent, at $6,720 a tonne from the close in London on Friday, when the market shed $145.
Turnover was 240 lots versus 100 lots around the same time on Friday.
Dealers said prices were supported after workers at the Altonorte copper smelter in Chile, which produced just under 300,000 tonnes of metal in 2005, rejected a final contract offer from owner Xstrata Plc
A strike is scheduled to start at 1100 GMT on Monday. "The story today is probably going to be Altonorte. There isn't much else out there and trade has not been especially busy," a U.S.-based dealer said.
"But once the market cracked $6,700, we saw a little more interest," he added.
China's domestic copper market could see support from declining treatment and refining charges -- fees to convert copper ore into metal.
"Traders are concerned about the production decline at Chinese copper refiners due to lower refining fees," said Yang Jun, an analyst at Dalian Northern Futures Agent Co. Ltd.
He added that Chinese smelters would have to accept fees of $60-70 per tonne, down from $100.
"The lower charge will drive some Chinese smelters, especially smaller ones, to cut production."
Copper stocks in LME warehouses at 174,100 tonnes on Friday have risen nearly seven-fold from a low of 25,525 tonnes in July 2005.
"The persistent stock increases are starting to weigh on sentiment," Macquarie Bank said in a weekly report.
"Particularly now that the SRB (State Reserves Bureau) is believed to have completed its sales, the inventory increases do appear to represent a real shift into surplus."
The most active February Shanghai aluminium futures contract lost 60 yuan to 20,510 yuan a tonne.
LME aluminium was flat at $2,800.
"In aluminium, there may be some value. We are 12 percent below the peak and trending higher. Inventories are falling. It may be worth a shot," Sean Corrigan, chief investment strategist at Diapason Commodities Management, told Reuters.
Nickel for delivery in three months hit a new high of $34,950 per tonne on the London Metal Exchange on Friday, before closing at $34,350.
By 0727 GMT, nickel was at $34,500.
"Producers are having trouble keeping up with demand. Stainless steel demand, for example, is sufficient to keep nickel producers busy for some time to come," Corrigan said.
"If China continues to grow, nickel miners will need to make sure the new sources that they have been promising to bring on actually arrive."
Chinese copper futures were little changed, with the most active February contract 20 yuan weaker at 63,090 yuan a tonne.
The contract had earlier dipped one percent to 62,500 yuan, a one-month low.
At 0727 GMT, copper for delivery in three months on the LME was up $85, or 1.25 percent, at $6,720 a tonne from the close in London on Friday, when the market shed $145.
Turnover was 240 lots versus 100 lots around the same time on Friday.
Dealers said prices were supported after workers at the Altonorte copper smelter in Chile, which produced just under 300,000 tonnes of metal in 2005, rejected a final contract offer from owner Xstrata Plc
A strike is scheduled to start at 1100 GMT on Monday. "The story today is probably going to be Altonorte. There isn't much else out there and trade has not been especially busy," a U.S.-based dealer said.
"But once the market cracked $6,700, we saw a little more interest," he added.
China's domestic copper market could see support from declining treatment and refining charges -- fees to convert copper ore into metal.
"Traders are concerned about the production decline at Chinese copper refiners due to lower refining fees," said Yang Jun, an analyst at Dalian Northern Futures Agent Co. Ltd.
He added that Chinese smelters would have to accept fees of $60-70 per tonne, down from $100.
"The lower charge will drive some Chinese smelters, especially smaller ones, to cut production."
Copper stocks in LME warehouses at 174,100 tonnes on Friday have risen nearly seven-fold from a low of 25,525 tonnes in July 2005.
"The persistent stock increases are starting to weigh on sentiment," Macquarie Bank said in a weekly report.
"Particularly now that the SRB (State Reserves Bureau) is believed to have completed its sales, the inventory increases do appear to represent a real shift into surplus."
The most active February Shanghai aluminium futures contract lost 60 yuan to 20,510 yuan a tonne.
LME aluminium was flat at $2,800.
"In aluminium, there may be some value. We are 12 percent below the peak and trending higher. Inventories are falling. It may be worth a shot," Sean Corrigan, chief investment strategist at Diapason Commodities Management, told Reuters.
Nickel for delivery in three months hit a new high of $34,950 per tonne on the London Metal Exchange on Friday, before closing at $34,350.
By 0727 GMT, nickel was at $34,500.
"Producers are having trouble keeping up with demand. Stainless steel demand, for example, is sufficient to keep nickel producers busy for some time to come," Corrigan said.
"If China continues to grow, nickel miners will need to make sure the new sources that they have been promising to bring on actually arrive."
Thursday, December 14, 2006
Copper edged up as the market recovered after falling some 2 pct yesterday amid yet another gain in LME inventories and concerns over global growth, but analysts warned the market looks weak as it heads into the year end.
At 12.33 pm, LME copper for three-month delivery was up at 6,795.00 usd a tonne from 6,715.00 usd at the close yesterday.
'Prices are likely to drift lower with only scaled-down buyers ... attracted to the weaker price levels while other consumer/merchants are in no hurry to buy,' said UBS Investment Bank analyst Robin Bhar.
Copper prices fell yesterday after LME stocks rose by 4,600 tonnes and after the World Bank said a slowdown in global economic growth is underway, led by the US.
The bank added that a cooling US housing market could intensify the downturn.
The LME said in its daily report today that copper stocks in its warehouses have risen by another 1,675 tonnes. Stockpiles are now more than 40 pct above levels seen in mid-October.
'With the relentless stock falls now no longer evident, it looks as though the dynamics of the market have changed,' said BaseMetals.com analyst William Adams.
He added while 'there are risks to supply from strikes and maintenance shutdowns, in this environment, buyers may feel in no need to restock. Until they do, prices are likely to drift'.
Chile's Codelco, the world's largest copper producer, is currently negotiating a new labour contract with workers at its Norte division, as the old one expires on Dec 31.
Although the market is unsure as to the progress of those negotiations, it looks like another potential strike, at Xstrata PLC's Altonorte smelter, might be averted.
Xstrata is due to present its new contract offer to workers today, and Bhar of UBS noted that a company source has said the miner is confident its new offer will be accepted.
Elsewhere, lead edged up to 1,650.00 usd a tonne from 1,640.00 usd. The metal fell nearly 5 pct yesterday as funds sold after the 10 and 30-day moving averages were breached.
Zinc rose to 4,370.00 usd against 4,275.00 usd, after it lost nearly 2 pct yesterday even as the International Lead and Zinc Study Group said the metal was in a deficit of 320,000 tonnes for the January to October period.
In other metals, LME tin for three-month delivery fell to 10,925.00 usd a tonne from 10,950.00 usd yesterday, nickel climbed to 34,400.00 usd from 33,250.00 usd while aluminium bounced up to 2,857.50 usd from 2,800.00 usd.
At 12.33 pm, LME copper for three-month delivery was up at 6,795.00 usd a tonne from 6,715.00 usd at the close yesterday.
'Prices are likely to drift lower with only scaled-down buyers ... attracted to the weaker price levels while other consumer/merchants are in no hurry to buy,' said UBS Investment Bank analyst Robin Bhar.
Copper prices fell yesterday after LME stocks rose by 4,600 tonnes and after the World Bank said a slowdown in global economic growth is underway, led by the US.
The bank added that a cooling US housing market could intensify the downturn.
The LME said in its daily report today that copper stocks in its warehouses have risen by another 1,675 tonnes. Stockpiles are now more than 40 pct above levels seen in mid-October.
'With the relentless stock falls now no longer evident, it looks as though the dynamics of the market have changed,' said BaseMetals.com analyst William Adams.
He added while 'there are risks to supply from strikes and maintenance shutdowns, in this environment, buyers may feel in no need to restock. Until they do, prices are likely to drift'.
Chile's Codelco, the world's largest copper producer, is currently negotiating a new labour contract with workers at its Norte division, as the old one expires on Dec 31.
Although the market is unsure as to the progress of those negotiations, it looks like another potential strike, at Xstrata PLC's Altonorte smelter, might be averted.
Xstrata is due to present its new contract offer to workers today, and Bhar of UBS noted that a company source has said the miner is confident its new offer will be accepted.
Elsewhere, lead edged up to 1,650.00 usd a tonne from 1,640.00 usd. The metal fell nearly 5 pct yesterday as funds sold after the 10 and 30-day moving averages were breached.
Zinc rose to 4,370.00 usd against 4,275.00 usd, after it lost nearly 2 pct yesterday even as the International Lead and Zinc Study Group said the metal was in a deficit of 320,000 tonnes for the January to October period.
In other metals, LME tin for three-month delivery fell to 10,925.00 usd a tonne from 10,950.00 usd yesterday, nickel climbed to 34,400.00 usd from 33,250.00 usd while aluminium bounced up to 2,857.50 usd from 2,800.00 usd.
Wednesday, December 13, 2006
Shanghai copper futures dipped on Wednesday on fears of slowing economic growth, and dealers expect a softer start to 2007 with prices possibly picking up in the second half.
Chinese copper futures prices were lower, with the most active February contract down half a percent percent, or 330 yuan, at 63,830 yuan a tonne at the close of trade.
"We read various assessments and the view seems to be lower prices in the first half of next year and higher in the second," a dealer in Singapore said.
"Of course there is always room for the unexpected -- mine accidents and so on, but I think the market will track that consensus. We are taking the Swiss approach -- a neutral view is the way to trade these markets."
Copper for delivery in three months on the London Metal Exchange was flat at $6,850 a tonne by 0627 GMT from the close in London on Monday. Turnover was 192 lots.
"We have seen that copper has been weak in China since October due to a decline in the country's apparent consumption. I don't expect the market to recover next year," said Li Ke, an analyst at Jiangsu Holly Futures Brokerage Co. Ltd. in Nanjing.
Cash copper in eastern China eased 235 yuan to trade between 65,430 yuan and 65,800 yuan.
China's economic growth is likely to slow slightly to between 9.6 and 10.1 percent in 2007, a think-tank said last week.
RATE CUT?
The Fed on Tuesday left U.S. rates unchanged for a fourth straight meeting, renewing a warning on inflation but nodding to mixed economic signals and a "substantial" housing slowdown.
The Fed departed from its last statement in October by noting the scope of the housing downturn and cross-currents in recent data -- shifts which financial markets took as hints the central bank's focus on inflation was softening.
A Reuters poll conducted on Tuesday after the Fed released its post-meeting statement showed that 13 out of 18 U.S. primary bond dealers believed the Fed was done raising rates, and that its next policy action will be to cut them.
A cut in U.S. interest rates would weigh on the dollar, making base metals more attractive for holders of other currencies, but a slowdown in U.S. growth could depress demand.
LME aluminium was down $4 at $2,806.
The most active February Shanghai aluminium futures contract gained one percent, rising 240 yuan to 20,560 yuan a tonne.
"Shanghai aluminium looks strong due to firm cash prices. For the January contract, we see it touching 21,000 yuan soon," Li said.
The January contract was at 20,870 yuan, versus 20,680 yuan on Tuesday.
Aluminium in eastern China for immediate delivery was quoted at 21,450 yuan to 21,470 yuan a tonne on Wednesday.
London zinc futures ticked $10 lower at $4,370.
Australia's Zinifex Ltd., which is merging its zinc assets with Belgium's Umicore, said its Century zinc mine in Australia had resumed operations and production losses were less than originally forecast.
Output at the mine was halted for four days due to mechanical problems with a concentrator, and would result in the loss of 5,600 tonnes of zinc production, down from an original estimate of 8,300 tonnes, it said.
Zinc prices have rallied 130 percent this year and touched a record $4,580 in November. The metal is also tipped as one of the strongest performers in 2007.
"We're not seeing a slowdown in demand for zinc, which is very strong," Australia & New Zealand Banking Corp. commodities strategist Andrew Harrington said. "The markets are very sensitive to the supply side."
Chinese copper futures prices were lower, with the most active February contract down half a percent percent, or 330 yuan, at 63,830 yuan a tonne at the close of trade.
"We read various assessments and the view seems to be lower prices in the first half of next year and higher in the second," a dealer in Singapore said.
"Of course there is always room for the unexpected -- mine accidents and so on, but I think the market will track that consensus. We are taking the Swiss approach -- a neutral view is the way to trade these markets."
Copper for delivery in three months on the London Metal Exchange was flat at $6,850 a tonne by 0627 GMT from the close in London on Monday. Turnover was 192 lots.
"We have seen that copper has been weak in China since October due to a decline in the country's apparent consumption. I don't expect the market to recover next year," said Li Ke, an analyst at Jiangsu Holly Futures Brokerage Co. Ltd. in Nanjing.
Cash copper in eastern China eased 235 yuan to trade between 65,430 yuan and 65,800 yuan.
China's economic growth is likely to slow slightly to between 9.6 and 10.1 percent in 2007, a think-tank said last week.
RATE CUT?
The Fed on Tuesday left U.S. rates unchanged for a fourth straight meeting, renewing a warning on inflation but nodding to mixed economic signals and a "substantial" housing slowdown.
The Fed departed from its last statement in October by noting the scope of the housing downturn and cross-currents in recent data -- shifts which financial markets took as hints the central bank's focus on inflation was softening.
A Reuters poll conducted on Tuesday after the Fed released its post-meeting statement showed that 13 out of 18 U.S. primary bond dealers believed the Fed was done raising rates, and that its next policy action will be to cut them.
A cut in U.S. interest rates would weigh on the dollar, making base metals more attractive for holders of other currencies, but a slowdown in U.S. growth could depress demand.
LME aluminium was down $4 at $2,806.
The most active February Shanghai aluminium futures contract gained one percent, rising 240 yuan to 20,560 yuan a tonne.
"Shanghai aluminium looks strong due to firm cash prices. For the January contract, we see it touching 21,000 yuan soon," Li said.
The January contract was at 20,870 yuan, versus 20,680 yuan on Tuesday.
Aluminium in eastern China for immediate delivery was quoted at 21,450 yuan to 21,470 yuan a tonne on Wednesday.
London zinc futures ticked $10 lower at $4,370.
Australia's Zinifex Ltd., which is merging its zinc assets with Belgium's Umicore, said its Century zinc mine in Australia had resumed operations and production losses were less than originally forecast.
Output at the mine was halted for four days due to mechanical problems with a concentrator, and would result in the loss of 5,600 tonnes of zinc production, down from an original estimate of 8,300 tonnes, it said.
Zinc prices have rallied 130 percent this year and touched a record $4,580 in November. The metal is also tipped as one of the strongest performers in 2007.
"We're not seeing a slowdown in demand for zinc, which is very strong," Australia & New Zealand Banking Corp. commodities strategist Andrew Harrington said. "The markets are very sensitive to the supply side."
Tuesday, December 12, 2006
Copper edged lower as the market consolidated after posting gains yesterday and as traders reacted to news a potential strike at Xstrata's Altonorte smelter will be held off for 5 days amid requests for government mediation.
At 1.06 pm, LME copper for three-month delivery had edged down to 6,855.00 usd a tonne from 6,930.00 usd at the close yesterday.
Copper edged up yesterday amid concern over a potential strike at Chile's Altonorte smelter and on news Chinese copper imports rose 6 pct in November, bringing an end to the declining import trend seen since the start of the year.
The metal has come under slight pressure today, however, amid news Xstrata has requested Chilean government mediation in contract talks with unions at its Altonorte smelter, holding off a potential strike for 5 working days.
Further, UBS Investment Bank analyst Robin Bhar noted that while today's LME report showed copper stocks actually edged lower, reversing a recent rising trend, the number of cancelled warrants have fallen to a very low level.
Cancelled warrants represent warehouse stocks booked and due for delivery. According to Bhar, they have now fallen to just 1.6 pct of total LME copper stocks, suggesting the amount of metal due to leave the warehouses is pretty low 'as demand is currently slack because of seasonal considerations'.
'Copper prices still look likely to head lower unless the 7,000 usd a tonne level is regained,' said Bhar.
Elsewhere, LME tin for three month delivery edged down to 10,850.00 usd a tonne after touching a new contract high of 11,250.00 usd yesterday as traders eyed a crackdown by the Indonesian government on illegal tin mining.
LME lead for three month delivery was also lower, trading at 1,760.00 usd after it also touched a new contract high yesterday, of 1,775.00 usd, amid a continuing fall in LME stocks and a rise in cancelled warrants.
In other metals, three month LME zinc bucked the trend to edge up to 4,395.00 usd against 4,350.00 usd yesterday, while nickel fell to 33,700.00 usd against 34,000.00 usd and aluminium dipped to 2,795.00 usd against 2,800.00 usd.
At 1.06 pm, LME copper for three-month delivery had edged down to 6,855.00 usd a tonne from 6,930.00 usd at the close yesterday.
Copper edged up yesterday amid concern over a potential strike at Chile's Altonorte smelter and on news Chinese copper imports rose 6 pct in November, bringing an end to the declining import trend seen since the start of the year.
The metal has come under slight pressure today, however, amid news Xstrata has requested Chilean government mediation in contract talks with unions at its Altonorte smelter, holding off a potential strike for 5 working days.
Further, UBS Investment Bank analyst Robin Bhar noted that while today's LME report showed copper stocks actually edged lower, reversing a recent rising trend, the number of cancelled warrants have fallen to a very low level.
Cancelled warrants represent warehouse stocks booked and due for delivery. According to Bhar, they have now fallen to just 1.6 pct of total LME copper stocks, suggesting the amount of metal due to leave the warehouses is pretty low 'as demand is currently slack because of seasonal considerations'.
'Copper prices still look likely to head lower unless the 7,000 usd a tonne level is regained,' said Bhar.
Elsewhere, LME tin for three month delivery edged down to 10,850.00 usd a tonne after touching a new contract high of 11,250.00 usd yesterday as traders eyed a crackdown by the Indonesian government on illegal tin mining.
LME lead for three month delivery was also lower, trading at 1,760.00 usd after it also touched a new contract high yesterday, of 1,775.00 usd, amid a continuing fall in LME stocks and a rise in cancelled warrants.
In other metals, three month LME zinc bucked the trend to edge up to 4,395.00 usd against 4,350.00 usd yesterday, while nickel fell to 33,700.00 usd against 34,000.00 usd and aluminium dipped to 2,795.00 usd against 2,800.00 usd.
Monday, December 11, 2006
Copper futures firmed in Shanghai after better-than-expected U.S. employment data helped to ease concern that slowing economic growth in the U.S. and China might translate into reduced demand for the industrial metal.
U.S. employers added more jobs than predicted in November, showing the economy's resilience as housing and manufacturing slump, a government report showed last week. Copper has been under pressure from signs of slowing growth in the U.S. and China, the world's biggest users of the metal used in wires and pipes.
``Any good sign in the U.S. economy may lend strength to copper,'' Wu Bowen, a trader at Shanghai Jinpeng Futures Co., said today.
Copper for delivery in February fell as much as 130 yuan, or 0.2 percent, before recovering to settle 60 yuan up at 63,690 yuan ($8,129) a ton on the Shanghai Futures Exchange. The contract has dropped 23 percent since May 15 when it touched record high of 84,100 yuan.
Metal for immediate delivery in Changjiang, Shanghai's biggest spot market, traded little changed between 65,200 and 67,400 yuan a ton today.
Investment growth in China's power sector, which accounts for half of the country's copper consumption, has slowed for the third consecutive year this year, Wu said, citing official statistics he obtained. House-building, which accounts for half of U.S. copper consumption, dropped to a six-year low in October, U.S. data shows.
Copper for delivery in three months on the London Metal Exchange traded $10 up at $6,890 a ton at 3:23 p.m. Shanghai time.
U.S. employers added more jobs than predicted in November, showing the economy's resilience as housing and manufacturing slump, a government report showed last week. Copper has been under pressure from signs of slowing growth in the U.S. and China, the world's biggest users of the metal used in wires and pipes.
``Any good sign in the U.S. economy may lend strength to copper,'' Wu Bowen, a trader at Shanghai Jinpeng Futures Co., said today.
Copper for delivery in February fell as much as 130 yuan, or 0.2 percent, before recovering to settle 60 yuan up at 63,690 yuan ($8,129) a ton on the Shanghai Futures Exchange. The contract has dropped 23 percent since May 15 when it touched record high of 84,100 yuan.
Metal for immediate delivery in Changjiang, Shanghai's biggest spot market, traded little changed between 65,200 and 67,400 yuan a ton today.
Investment growth in China's power sector, which accounts for half of the country's copper consumption, has slowed for the third consecutive year this year, Wu said, citing official statistics he obtained. House-building, which accounts for half of U.S. copper consumption, dropped to a six-year low in October, U.S. data shows.
Copper for delivery in three months on the London Metal Exchange traded $10 up at $6,890 a ton at 3:23 p.m. Shanghai time.
Friday, December 08, 2006
Copper was down nearly one percent on the London Metal Exchange (LME) on Friday ahead of U.S. payrolls data and on concerns about a slowing U.S. economy, analysts said.
"In 2007, most of us expects the economic headwinds to get worse -- not better," analyst Nick Moore at ABN AMRO said.
A string of weak U.S. economic data has traders eyeing falling demand for base metals such as copper, with many investors now bracing for the Federal Reserve to cut interest rates from 5.25 percent as many as three times next year to try to bolster growth.
U.S. non-farm payrolls data for November due at 1330 GMT is in focus, giving clues about the state of the U.S. economy.
"The payroll numbers are absolutely crucial," Moore said, adding that if the financial investor -- who has been driving the commodities prices higher -- is influenced more by the macro environment than by fundamentals then prices will go lower from here.
Copper for delivery in three months was quoted at $6,845/6,846 a tonne in the open outcry trading session, against $6,890 on Thursday when it hit a two-week low at $6,806.
LME-monitored copper stocks have steadily swelled to around 166,000 tonnes, the highest level seen in two years, from little more than 25,000 tonnes in July last year, dampening sentiment.
BHP Billiton, the world's biggest miner, said its Spence copper mine in Chile produced its first cathode this week, about three weeks ahead of schedule.
"There is a convoy of copper mines due on stream," Moore said and forecast the copper price to fall in 2007 and 2008.
Mining stocks on the London Stock Exchange were found among the top ten losers, down around one to four percent after Merrill Lynch cut its rating on the sector to neutral.
"Sector downgrade is based on concerns about the impact of a slowing global economy in 2007 on metals consumption and our view this will impact stock performance in Q1/Q2.," Merrill said in a note.
But the metal prices would be underpinned short-term by potential supply disruptions, analyst William Adams at BaseMetals.com said in a note.
"Given the... supply disruptions from labour renegotiations at Codelco's Norte Division, Xstrata's Altonorte smelter and at BHP Billiton's Cerro Colerado mine, as well as the maintenance shutdowns at Collahuasi, there is a lot of risk potential."
Zinc fell to $4,268, down 0.5 percent. On Thursday, zinc slipped more than 3 percent to a two-week low of $4,240 as stocks at LME warehouses rose for the third consecutive day.
Together with nickel, zinc has been the best performer this year on the LME -- and they could, together with lead, continue to outperform copper and aluminium, JP Morgan said in a report.
Lead firmed to $1,731 from $1,708, supported by falling inventories, down to the lowest level this year at 39,400 tonnes.
Aluminium was lower at $2,815 against $2,820.
The metal has to close above $2,830 in order for it to break higher, an LME floor trader said.
"Aluminium looks good on the charts... people talk about it going up to $3,000 ahead of New Year...funds keep pushing it."
Aluminum returned to trade in backwardation, at a premium of $7/11 to the benchmark futures contract after trading at a discount - contango - of $8/6 in the previous session.
Tin was trading at $10,925, up against its last quote at $10,725/10,750 on Thursday.
"In 2007, most of us expects the economic headwinds to get worse -- not better," analyst Nick Moore at ABN AMRO said.
A string of weak U.S. economic data has traders eyeing falling demand for base metals such as copper, with many investors now bracing for the Federal Reserve to cut interest rates from 5.25 percent as many as three times next year to try to bolster growth.
U.S. non-farm payrolls data for November due at 1330 GMT is in focus, giving clues about the state of the U.S. economy.
"The payroll numbers are absolutely crucial," Moore said, adding that if the financial investor -- who has been driving the commodities prices higher -- is influenced more by the macro environment than by fundamentals then prices will go lower from here.
Copper for delivery in three months was quoted at $6,845/6,846 a tonne in the open outcry trading session, against $6,890 on Thursday when it hit a two-week low at $6,806.
LME-monitored copper stocks have steadily swelled to around 166,000 tonnes, the highest level seen in two years, from little more than 25,000 tonnes in July last year, dampening sentiment.
BHP Billiton, the world's biggest miner, said its Spence copper mine in Chile produced its first cathode this week, about three weeks ahead of schedule.
"There is a convoy of copper mines due on stream," Moore said and forecast the copper price to fall in 2007 and 2008.
Mining stocks on the London Stock Exchange were found among the top ten losers, down around one to four percent after Merrill Lynch cut its rating on the sector to neutral.
"Sector downgrade is based on concerns about the impact of a slowing global economy in 2007 on metals consumption and our view this will impact stock performance in Q1/Q2.," Merrill said in a note.
But the metal prices would be underpinned short-term by potential supply disruptions, analyst William Adams at BaseMetals.com said in a note.
"Given the... supply disruptions from labour renegotiations at Codelco's Norte Division, Xstrata's Altonorte smelter and at BHP Billiton's Cerro Colerado mine, as well as the maintenance shutdowns at Collahuasi, there is a lot of risk potential."
Zinc fell to $4,268, down 0.5 percent. On Thursday, zinc slipped more than 3 percent to a two-week low of $4,240 as stocks at LME warehouses rose for the third consecutive day.
Together with nickel, zinc has been the best performer this year on the LME -- and they could, together with lead, continue to outperform copper and aluminium, JP Morgan said in a report.
Lead firmed to $1,731 from $1,708, supported by falling inventories, down to the lowest level this year at 39,400 tonnes.
Aluminium was lower at $2,815 against $2,820.
The metal has to close above $2,830 in order for it to break higher, an LME floor trader said.
"Aluminium looks good on the charts... people talk about it going up to $3,000 ahead of New Year...funds keep pushing it."
Aluminum returned to trade in backwardation, at a premium of $7/11 to the benchmark futures contract after trading at a discount - contango - of $8/6 in the previous session.
Tin was trading at $10,925, up against its last quote at $10,725/10,750 on Thursday.
Thursday, December 07, 2006
Copper fell, extending yesterday's declines, as participants worried demand for the metal might slow next year as the slowdown in US economic growth starts to impact other economies, specifically in Europe
Falls were limited, however, by the prospect of impending strike action at Xstrata, the world's fourth largest copper producer, and by ongoing labour negotiations at Chile's Codelco, the largest
At 1.20 pm, LME copper for three month delivery edged down to 6,875.50 usd a tonne against 6,990.00 usd at the close yesterday
"Although recent economic data from Europe suggest a robust growth trend, the economies can not stay away for long from the double whammy of strengthening domestic currency and slowing US (growth)," said Standard Bank analyst Michael Skinner. The euro last week rose to 20 month highs against the dollar and while it has given back some of those gains this week, its overall strength against the greenback could adversely impact European exports going forward
Copper fell almost 3 pct yesterday after a lacklustre options declaration and on the back of a slight pick-up in the dollar. Copper is traded in dollars so a stronger US currency makes the metal more expensive
BNP Paribas analyst David Thurtell noted the strong fall in copper came despite worries over reports that a union leader at Xstrata's Altonorte smelter in Chile said workers will vote to strike on Dec 8-9 amid a wage dispute
"The move in cancelled warrants and warehouse stocks were both bearish on this metal too," he added. Cancelled warrants represent warehouse stocks booked and due for delivery
Copper has been under pressure recently from worries over slowing US economic growth and rising inventories, which have increased about 40 pct since mid-October
Elsewhere, aluminium remained under pressure after closing nearly 2 pct lower yesterday as hopes that the December options expiry would be accompanied by volatile prices were dashed, said UBS Investment Bank analyst Robin Bhar
Aluminium for three month delivery fell to 2,776.50 usd from 2,780.00 usd at the close yesterday
The metal rose to a six month high on Tuesday as traders noted a large amount of option contracts to buy aluminium at 3,000 usd a tonne -- significantly above the metal's recent trading range -- were still outstanding
An options expiry refers to the final date by which holders of options can buy or sell a futures contract at a pre-specified price
"We suspect there was never the intention to exercise the options but to keep the market tight and support prices. A similar ploy might be instigated next month," said Bhar
Falls were limited, however, by the prospect of impending strike action at Xstrata, the world's fourth largest copper producer, and by ongoing labour negotiations at Chile's Codelco, the largest
At 1.20 pm, LME copper for three month delivery edged down to 6,875.50 usd a tonne against 6,990.00 usd at the close yesterday
"Although recent economic data from Europe suggest a robust growth trend, the economies can not stay away for long from the double whammy of strengthening domestic currency and slowing US (growth)," said Standard Bank analyst Michael Skinner. The euro last week rose to 20 month highs against the dollar and while it has given back some of those gains this week, its overall strength against the greenback could adversely impact European exports going forward
Copper fell almost 3 pct yesterday after a lacklustre options declaration and on the back of a slight pick-up in the dollar. Copper is traded in dollars so a stronger US currency makes the metal more expensive
BNP Paribas analyst David Thurtell noted the strong fall in copper came despite worries over reports that a union leader at Xstrata's Altonorte smelter in Chile said workers will vote to strike on Dec 8-9 amid a wage dispute
"The move in cancelled warrants and warehouse stocks were both bearish on this metal too," he added. Cancelled warrants represent warehouse stocks booked and due for delivery
Copper has been under pressure recently from worries over slowing US economic growth and rising inventories, which have increased about 40 pct since mid-October
Elsewhere, aluminium remained under pressure after closing nearly 2 pct lower yesterday as hopes that the December options expiry would be accompanied by volatile prices were dashed, said UBS Investment Bank analyst Robin Bhar
Aluminium for three month delivery fell to 2,776.50 usd from 2,780.00 usd at the close yesterday
The metal rose to a six month high on Tuesday as traders noted a large amount of option contracts to buy aluminium at 3,000 usd a tonne -- significantly above the metal's recent trading range -- were still outstanding
An options expiry refers to the final date by which holders of options can buy or sell a futures contract at a pre-specified price
"We suspect there was never the intention to exercise the options but to keep the market tight and support prices. A similar ploy might be instigated next month," said Bhar
Wednesday, December 06, 2006
Shanghai copper prices rose over 1.5 percent on Wednesday, tracking modest gains in London Metal Exchange prices, while aluminium softened a touch after hitting a six-month peak the previous session.
Nickel was mostly unchanged after touching a record high on Tuesday due to low levels of global stocks, while lead was untraded after also hitting a peak the previous session.
Chinese copper futures prices rose, with the most active February contract ending the morning session up 980 yuan at 64,920 yuan per tonne.
Copper for delivery in three months on the London Metal Exchange fell to $7,110 a tonne by 0400 GMT, against $7,175 at the London close on Tuesday, when it had posted earlier gains above $7,200 and much firmer from under $7,000 during Asian trade.
"The fact that prices failed to break lower suggests a certain amount of underlying buying and then Tuesday's rebound also suggests buyers, or short-covers, were prepared to chase the market higher too," said William Adams, an analyst at Basemetals.com in a daily note.
Movements in copper prices have been mostly restrained in recent weeks in comparison to other metals such as aluminium, as the market ponders how a slowing U.S. economy will impact demand.
"At least this is a sign of some strength returning to copper, even if it still ran into overhead supply above $7,225/t," said Adams.
Aluminium for three-month delivery was a little softer at $2,833 against the close of $2,841 a tonne on Tuesday, when it earlier had surged to a six-month peak of $2,851 a tonne, the highest since May.
A large amount of outstanding December call option contracts to buy three-month aluminium futures at $3,000 a tonne on the LME will mature at 1130 GMT.
Some in the market feel the gains could be due to holders of these positions ramping up prices before that time.
"After seeing such large gains, people feel there are some longs out there that are pushing the prices higher," said Wang Zheng, an analyst at Shanghai Dalu Futures.
Wang said easing tightness could stymie significant gains above $3,000.
Option holders can exercise their right to buy or sell the underlying metals future at a specified price at a fixed time.
The cash-to-threes on three month aluminium fliped to contango of $1 from backwardation of $10 on Monday, indicating additional supply.
The most active February Shanghai aluminium futures contract closed the morning session slightly firmer at 20,250 yuan a tonne, compared with Tuesday's finish of 20,180 yuan.
Nickel was mostly steady at $34,200 against $34,250 at the London close, following a surge to a new all-time high of $34,500 on low LME stocks.
Lead was untraded at $1,730 after also hitting a new high of $1,758 a tonne on Tuesday before closing at $1,735.
Nickel was mostly unchanged after touching a record high on Tuesday due to low levels of global stocks, while lead was untraded after also hitting a peak the previous session.
Chinese copper futures prices rose, with the most active February contract ending the morning session up 980 yuan at 64,920 yuan per tonne.
Copper for delivery in three months on the London Metal Exchange fell to $7,110 a tonne by 0400 GMT, against $7,175 at the London close on Tuesday, when it had posted earlier gains above $7,200 and much firmer from under $7,000 during Asian trade.
"The fact that prices failed to break lower suggests a certain amount of underlying buying and then Tuesday's rebound also suggests buyers, or short-covers, were prepared to chase the market higher too," said William Adams, an analyst at Basemetals.com in a daily note.
Movements in copper prices have been mostly restrained in recent weeks in comparison to other metals such as aluminium, as the market ponders how a slowing U.S. economy will impact demand.
"At least this is a sign of some strength returning to copper, even if it still ran into overhead supply above $7,225/t," said Adams.
Aluminium for three-month delivery was a little softer at $2,833 against the close of $2,841 a tonne on Tuesday, when it earlier had surged to a six-month peak of $2,851 a tonne, the highest since May.
A large amount of outstanding December call option contracts to buy three-month aluminium futures at $3,000 a tonne on the LME will mature at 1130 GMT.
Some in the market feel the gains could be due to holders of these positions ramping up prices before that time.
"After seeing such large gains, people feel there are some longs out there that are pushing the prices higher," said Wang Zheng, an analyst at Shanghai Dalu Futures.
Wang said easing tightness could stymie significant gains above $3,000.
Option holders can exercise their right to buy or sell the underlying metals future at a specified price at a fixed time.
The cash-to-threes on three month aluminium fliped to contango of $1 from backwardation of $10 on Monday, indicating additional supply.
The most active February Shanghai aluminium futures contract closed the morning session slightly firmer at 20,250 yuan a tonne, compared with Tuesday's finish of 20,180 yuan.
Nickel was mostly steady at $34,200 against $34,250 at the London close, following a surge to a new all-time high of $34,500 on low LME stocks.
Lead was untraded at $1,730 after also hitting a new high of $1,758 a tonne on Tuesday before closing at $1,735.
Tuesday, December 05, 2006
Gold mining stocks headed south as prices for the metal cooled Tuesday, while copper miners followed the price of copper higher.
Barclays Capital analyst Kevin Norrish told clients in a report Tuesday that "some profit-taking has emerged overnight and early this morning" in the gold market, which has driven prices lower.
Gold for February delivery dipped $2.40 to $648.50 an ounce in midday trading on the New York Mercantile Exchange.
Shares of gold miner Barrick Gold Corp. fell 60 cents, or 2 percent, to $30.90 on the New York Stock Exchange. Newmont Mining Corp. shares edged 26 cents lower to $46.93, while Goldcorp Inc. shares shed 59 cents to $30.59.
March copper picked up 7 cents to $3.25 a pound.
Copper miners Phelps Dodge Corp. and Freeport McMoran Copper & Gold Inc. -- which have agreed to merge -- both saw their shares tick higher. Phelps Dodge gained 15 cents to $122.30 on the Big Board, while Freeport added 77 cents to $61.70. Peru's Southern Copper Corp. saw its shares lose 20 cents to $55.30.
Barclays Capital analyst Kevin Norrish told clients in a report Tuesday that "some profit-taking has emerged overnight and early this morning" in the gold market, which has driven prices lower.
Gold for February delivery dipped $2.40 to $648.50 an ounce in midday trading on the New York Mercantile Exchange.
Shares of gold miner Barrick Gold Corp. fell 60 cents, or 2 percent, to $30.90 on the New York Stock Exchange. Newmont Mining Corp. shares edged 26 cents lower to $46.93, while Goldcorp Inc. shares shed 59 cents to $30.59.
March copper picked up 7 cents to $3.25 a pound.
Copper miners Phelps Dodge Corp. and Freeport McMoran Copper & Gold Inc. -- which have agreed to merge -- both saw their shares tick higher. Phelps Dodge gained 15 cents to $122.30 on the Big Board, while Freeport added 77 cents to $61.70. Peru's Southern Copper Corp. saw its shares lose 20 cents to $55.30.
Monday, December 04, 2006
Copper fell below the key 7,000 usd a tonne level after London Metal Exchange (LME) stocks rose again and as the market remained pressured by concerns about contracting demand in the US following Friday's much weaker than expected manufacturing data.
At 12.57 pm, LME copper for three month delivery edged down to 6,987.50 usd a tonne against 7,000.00 usd at the close Friday.
'Copper is still under pressure, we've fallen below the key 7,000 usd level, certainly the initial indication suggests the weak manufacturing data is still casting a shadow,' said UBS Investment Bank analyst Robin Bhar.
US data out Friday showed the Institute for Supply Management's index of manufacturing fell to 49.50 in November from 51.2 in October, falling below the 50 mark to indicate contraction in the sector.
A contracting manufacturing sector does not bode well for metals demand, especially as it comes amid an already contracting housing sector in the US, another key driver of demand, analysts noted.
BNP Paribas analyst David Thurtell said while the weaker US dollar partly offset the impact of the poor ISM data on Friday, it cannot make up for a decline in demand.
'The bottom line is that if copper etc. isn't needed in construction and manufacturing, modestly cheaper yen or euro prices won't make enough difference to demand,' he said.
'Besides, the metals are only 'cheaper' outside of the US: the US is still a big -- direct and indirect -- consumer of these trends,' he added.
Copper was also under pressure from yet another gain in LME stockpiles. Data out earlier showed LME copper stocks rose by 4,500 tonnes to total 161,225 tonnes. Stocks have now risen around 40 pct since mid-October.
Elsewhere, nickel edged lower after hitting a new all-time high of 34,300 usd on Friday, with analysts saying the fall in nickel prices was just a correction.
'We would look to buy into weakness those metals that are tight from a supply/demand perspective such as zinc, nickel, tin and lead where stocks are low as well,' said Bhar.
Aluminium edged lower after spiking more than 1 pct on Friday ahead of the December options expiry this Wednesday. An options expiry refers to the date when options holders can buy or sell a futures contract at a specific price.
'Aluminium is in the grip of a technical squeeze ... it's not (moving) on a fundamental basis,' said Bhar.
LME nickel for three month delivery edged down to 33,650.00 usd from 33,900.00 usd at the close Friday, while aluminium fell to 2,809.50 usd from 2,818.00 usd.
Other metals were up.
Three month zinc was up at 4,440.00 usd against 4,400.00 usd, tin was down at 10,675.00 usd against 10,700.00 usd, while lead rose to 1,732.50 usd from 1,695.00 usd.
At 12.57 pm, LME copper for three month delivery edged down to 6,987.50 usd a tonne against 7,000.00 usd at the close Friday.
'Copper is still under pressure, we've fallen below the key 7,000 usd level, certainly the initial indication suggests the weak manufacturing data is still casting a shadow,' said UBS Investment Bank analyst Robin Bhar.
US data out Friday showed the Institute for Supply Management's index of manufacturing fell to 49.50 in November from 51.2 in October, falling below the 50 mark to indicate contraction in the sector.
A contracting manufacturing sector does not bode well for metals demand, especially as it comes amid an already contracting housing sector in the US, another key driver of demand, analysts noted.
BNP Paribas analyst David Thurtell said while the weaker US dollar partly offset the impact of the poor ISM data on Friday, it cannot make up for a decline in demand.
'The bottom line is that if copper etc. isn't needed in construction and manufacturing, modestly cheaper yen or euro prices won't make enough difference to demand,' he said.
'Besides, the metals are only 'cheaper' outside of the US: the US is still a big -- direct and indirect -- consumer of these trends,' he added.
Copper was also under pressure from yet another gain in LME stockpiles. Data out earlier showed LME copper stocks rose by 4,500 tonnes to total 161,225 tonnes. Stocks have now risen around 40 pct since mid-October.
Elsewhere, nickel edged lower after hitting a new all-time high of 34,300 usd on Friday, with analysts saying the fall in nickel prices was just a correction.
'We would look to buy into weakness those metals that are tight from a supply/demand perspective such as zinc, nickel, tin and lead where stocks are low as well,' said Bhar.
Aluminium edged lower after spiking more than 1 pct on Friday ahead of the December options expiry this Wednesday. An options expiry refers to the date when options holders can buy or sell a futures contract at a specific price.
'Aluminium is in the grip of a technical squeeze ... it's not (moving) on a fundamental basis,' said Bhar.
LME nickel for three month delivery edged down to 33,650.00 usd from 33,900.00 usd at the close Friday, while aluminium fell to 2,809.50 usd from 2,818.00 usd.
Other metals were up.
Three month zinc was up at 4,440.00 usd against 4,400.00 usd, tin was down at 10,675.00 usd against 10,700.00 usd, while lead rose to 1,732.50 usd from 1,695.00 usd.
Friday, December 01, 2006
Copper may rise next week because of a shortage of concentrate, the raw material used by smelters, and after inventory of the finished metal fell, reducing supply.
Mine production lagged behind smelting capacity in the first eight months of the year, the International Copper Study Group reported earlier this month. Stockpiles monitored by commodity exchanges in London, New York and Shanghai have dropped 3 percent this week to 213,570 metric tons, according to data compiled by Bloomberg.
``Copper prices in the near term might yet climb as we understand that inventories downstream may be low,'' said John Meyer, a London-based analyst at Numis Securities Ltd. ``A shortage of concentrate supply is expected to continue.''
Ten of 17 analysts, investors and traders surveyed by Bloomberg yesterday forecast copper will gain next week. Three expected a decline and four little change.
Copper for delivery in three months on the London Metal Exchange dropped $95, or 1.3 percent, to $6,985 a ton as of 4:43 p.m. local time. A close at that price would mean a 2.4 percent decline this week. Prices gained 5.2 percent last week.
On the Comex division of the New York Mercantile Exchange, copper for March delivery fell 1.1 percent to $3.16 a pound. Copper for delivery in January on the Shanghai Futures Exchange slipped 0.6 percent to close at 66,030 yuan ($8,434) a ton. Chinese prices include 17 percent tax and 2 percent duty.
Mine Disruption
Disruptions at mines including Chile's Escondida, the world's largest for copper, resulted in ``essentially unchanged'' production growth during the eight months, the Lisbon-based ICSG said last month. At the same time, demand for the metal to make wires and plumbing expanded.
Mine output is trailing smelting capacity growth in China and India, said BHP Billiton, the world's largest miner and Escondida's owner.
``The expectation is that the copper-concentrate market will be tight,'' BHP Billiton Chief Executive Officer Charles ``Chip'' Goodyear said on Nov. 29 at a shareholders meeting in Brisbane, Australia. ``Part of it is lower production from copper-concentrate producers.''
Stockpiles tracked by the LME rose 0.9 percent to 156,725 tons, the exchange said today in a daily report. Exchange data showed that 12,475 tons, or 8 percent of total stockpiles monitored by the exchange, may be due for delivery and aren't freely available. Those so-called ``canceled warrants'' have more than doubled since the end of October.
`Supporting Factor'
The gain is ``a supporting factor'' for prices, said Catherine Virga, a New York-based analyst at CPM Group. Still, any advance will be limited by declines in imports to China, the world's largest copper user, she said.
China's copper-concentrate imports tumbled 46 percent in October from a year earlier, and copper purchases dropped 0.9 percent, the Beijing-based Customs General Administration said Nov. 27.
Imports fell mainly because there wasn't much material to be bought, said Adam Rowley, an analyst at Macquarie Bank Ltd. in London.
Mine production lagged behind smelting capacity in the first eight months of the year, the International Copper Study Group reported earlier this month. Stockpiles monitored by commodity exchanges in London, New York and Shanghai have dropped 3 percent this week to 213,570 metric tons, according to data compiled by Bloomberg.
``Copper prices in the near term might yet climb as we understand that inventories downstream may be low,'' said John Meyer, a London-based analyst at Numis Securities Ltd. ``A shortage of concentrate supply is expected to continue.''
Ten of 17 analysts, investors and traders surveyed by Bloomberg yesterday forecast copper will gain next week. Three expected a decline and four little change.
Copper for delivery in three months on the London Metal Exchange dropped $95, or 1.3 percent, to $6,985 a ton as of 4:43 p.m. local time. A close at that price would mean a 2.4 percent decline this week. Prices gained 5.2 percent last week.
On the Comex division of the New York Mercantile Exchange, copper for March delivery fell 1.1 percent to $3.16 a pound. Copper for delivery in January on the Shanghai Futures Exchange slipped 0.6 percent to close at 66,030 yuan ($8,434) a ton. Chinese prices include 17 percent tax and 2 percent duty.
Mine Disruption
Disruptions at mines including Chile's Escondida, the world's largest for copper, resulted in ``essentially unchanged'' production growth during the eight months, the Lisbon-based ICSG said last month. At the same time, demand for the metal to make wires and plumbing expanded.
Mine output is trailing smelting capacity growth in China and India, said BHP Billiton, the world's largest miner and Escondida's owner.
``The expectation is that the copper-concentrate market will be tight,'' BHP Billiton Chief Executive Officer Charles ``Chip'' Goodyear said on Nov. 29 at a shareholders meeting in Brisbane, Australia. ``Part of it is lower production from copper-concentrate producers.''
Stockpiles tracked by the LME rose 0.9 percent to 156,725 tons, the exchange said today in a daily report. Exchange data showed that 12,475 tons, or 8 percent of total stockpiles monitored by the exchange, may be due for delivery and aren't freely available. Those so-called ``canceled warrants'' have more than doubled since the end of October.
`Supporting Factor'
The gain is ``a supporting factor'' for prices, said Catherine Virga, a New York-based analyst at CPM Group. Still, any advance will be limited by declines in imports to China, the world's largest copper user, she said.
China's copper-concentrate imports tumbled 46 percent in October from a year earlier, and copper purchases dropped 0.9 percent, the Beijing-based Customs General Administration said Nov. 27.
Imports fell mainly because there wasn't much material to be bought, said Adam Rowley, an analyst at Macquarie Bank Ltd. in London.
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